BEST SAFETY NET IS COMPLETE REJECTION OF THE JPEPA

In contrast to their earlier hyperbolic claims, government negotiators are now at least finally acknowledging that the Japan-Philippines Economic Partnership Agreement (JPEPA) will have adverse effects, hence the need for “safety nets”. But no amount of safety nets will be enough precisely because Japan ’s intention is to create conditions for the maximum exploitation of the Philippines ’ natural and human resources through the JPEPA.

The country’s experience with the World Trade Organization (WTO) since 1995 also clearly shows that so-called safety nets are only token mechanisms that have completely failed to stop the disastrous effects of free trade. Anti-JPEPA group No Deal! reiterates that the best safety net against the JPEPA is to reject it completely.

The WTO was questioned before the Supreme Court in 1994. Although the high court eventually found the WTO agreement constitutional, the subsequent trade liberalization has had disastrous effects on the Philippine economy, severely damaging local agriculture and forcing millions of Filipinos to go abroad to seek work. The past decade of poor economic performance actually gives the Supreme Court a reason to revisit its arguments in Tañada, et al. vs. Angara , et al. (G.R. No. 118295) of May 2, 1997 .

That the main beneficiaries of trade liberalization are First World corporations is clearly shown by the fact that foreign firms have taken an increasingly larger share of manufacturing sales. Transnational corporations’ share of total manufacturing sales among the country’s top one thousand firms has grown from 56% in 1999 to 75% in 2004.

The negative effects of WTO-mandated trade liberalization on Third World countries has resulted in a breakdown in further trade talks since 2001 as underdeveloped countries are unable to accept the deeper liberalization being pushed by First World countries through the multilateral trade organization.

Thus, countries such as the US , Japan and the EU nations are seeking further liberalization through bilateral free trade agreements such as the JPEPA. These countries are also using such agreements to force countries to accept issues for liberalization such as investment, government procurement and competition policy, which were already rejected at WTO negotiations.

Government negotiators also appeared to have committed a grave abuse of discretion by entering into JPEPA motivated by a stubborn adherence to free trade dogma unsupported by sound scientific studies and economic reasoning. This is why they are having difficulty defending the JPEPA’s benefits before the Senate committee on foreign relations, forcing senators to continue scheduling hearings in a frantic attempt to find a pretext for sending the agreement before the body for ratification.

Indeed, government representatives have continuously played up the benefits to Japanese investors and domestic big business interests while glossing over the adverse effects on millions of Filipino fisherfolk, workers and farmers. This is a gross betrayal of government’s avowed duty to govern for the benefit of the majority.

The economy has only been weakened by free trade agreements such as under the WTO and like the proposed JPEPA. If the government is prepared to truly develop the domestic economy instead of surrender it to foreign traders and investors, then safety nets would not be needed. If it is not prepared, then no safety net will be good enough.

CONVENORS

Former Vice President Teofisto Guingona Former Senator Wigberto Tañada Anakpawis Representative Crispin Beltran Rafael Mariano, Kilusang Magbubukid ng Pilipinas Nitz Gonzaga, Kilusang Mayo Uno Fernando Hicap, Pamalakaya  Dr. Carol Pagaduan-Araullo, Bagong Alyansang Makabayan Jossel Ebesate, R.N., Alliance of Health Workers Connie Bragas-Regalado, Migrante Clemente Bautista Jr. Kalikasan People’s Network Rechielda Extremadura, Lila Filipina Arman Albarillo, Bayan-Southern Tagalog Roy Velez, Bayan-NCR Ed Cubelo, Toyoto workers union president Sonny Africa, Ibon Foundation Prof. Roland Simbulan, UP Arnold Padilla, spokesperson

BIOFUELS ACT: WILL IT LESSEN FOREIGN FIRMS’ GRIP ON THE LOCAL ENERGY SECTOR?

At first glance, the Biofuels Act seems like a promising start on the road towards national energy independence and weaning away from dependence on imported energy sources.

By Arnold Padilla

IBON Features– The search for indigenous energy sources is a vital one for the Philippines , given its dependence on imported oil. In the wake of recent record-high oil price levels, the Arroyo government has been actively promoting the search for alternative energy sources.

In her 2005 State of the Nation Address, President Gloria Arroyo had asked Congress to pass legislation on renewable and indigenous energy. She also actively promoted the Alternative Fuels Program of her Medium-Term Philippine Development Plan (MTPDP) 2004-2010 as one of the long-term solutions to high oil prices.

The passage of the Biofuels Act seems to be one answer to this search for indigenous energy sources. It calls for the use of “biofuels” such as bioethanol, biodiesel, and other fuels made from biomass (i.e. any organic matter which is renewable).

Bioethanol refers to ethanol produced from feedstock and other biomass suitably denatured for use as motor fuel while biodiesel refers to fatty acid methyl ester derived from vegetable oils or animal fats technically proven and approved by the Department of Energy (DoE) for use in diesel engines.

The law prescribes that a minimum 1% biodiesel be blended into all diesel engine fuels within three months of the implementation of the law, while bioethanol should comprise 5% of the annual total volume of gasoline fuel actually sold and distributed by all oil companies in the country within two years of the Act’s effectivity. Further, the Department of Energy is mandated by the Act to determine the feasibility of bioethanol increasing to a minimum of 10% of the total volume of gasoline fuel within four years and 2% for biodiesel within two years from the effectivity of the law.

Indigenous materials would be used to produce biofuels locally. Coconut would be used as feedstock for biodiesel. To ensure the program’s sustainability, the DOE is also studying other possible biodiesel feedstocks such as Jathropa Curcas or tuba-tuba. For bioethanol production, government aims to utilize sugar cane, corn, cassava, and nipa.

Thus, at first glance, the Biofuels Act seems like a promising start on the road towards national energy independence and weaning away from dependence on imported energy sources. But a closer look reveals how the law ultimately promotes foreign control over the country’s natural resources that is already the present state of the country’s oil industry.

Foreign Investors Cash In

It is expensive to set up an ethanol plant; one estimate pegged the cost at P2 billion for a plant with a capacity of 100,000 liters daily. The Act’s principal author, Miguel Zubiri, has said that the country needs to set up at least 25 ethanol plants in order for the Philippines to meet the prescribed ethanol-gasoline mix.

This high expense is why foreign corporations are behind most of the ethanol projects launched in the wake of the law.

For example, Saudi Aramco, 40% owner of Petron Corporation, expressed its plan to build an ethanol distillery or a jathropa processing plant in Mindanao as part of its commitment to invest $300 million in new investments from 2007 to 2010 to expand its refinery.

Meanwhile, the country’s first ethanol plant– the P2.28-billion San Carlos Bioenergy Inc. (SCBI) in San Carlos City, Negros Occidental with a production capacity of 27.3 million liters per year– was built by Bronzeoak Philippines, a local unit of British firm Bronzeoak Ltd. (60% ownership), together with the National Development Corporation.

Japanese firms are also very active in investing in biofuels; conglomerate Marubeni was reported as among the companies in ‘exploratory stage of venturing into ethanol projects.’ For coco-biodiesel production, Toyo Engineering Corporation (TEC) intends to develop 600,000 hectares of coconut lands with an investment range of P0.10 to P1 million per hectare.

Most recently, Filipino and Chinese companies recently forged memorandums of agreement to develop bioethanol plants.

All these pave the way for the foreign control over the country’s natural resources, like what has been prevailing in the oil industry. In fact, past Philippine governments have systematically placed the country’s energy resources in the hands of foreign business interests, at the expense of Filipino consumers and the national economy. Examples include former president Marcos’ integrated energy program in the 1970s and the Ramos government’s program to liberalize the local energy sector.

Governments have failed to exert substantial control over the country’s energy resources because of the foreign firms’ tight grip over the sector. One result of this is the endless rounds of oil price hikes that local consumers continue to suffer from.

Although local oil firms are quick to blame high global oil prices for the hikes, in fact exorbitant and unreasonable oil prices may be traced to the global cartel of the largest transnational corporations that manipulate international prices and domesti c p ump prices through transfer pricing.

Minimal Effects on Pump Prices

It should also be noted that the Biofuels Act by itself will not have any consequential impact on high and escalating local pump prices.

During the Senate deliberation on the biofuels bill, Energy Secretary Raphael Lotilla admitted that even a mandatory 10% biodiesel blend with regular diesel may result in a price reduction of only P0.50 per liter– already a small amount that may even be easily offset by frequent oil price hikes under deregulation.

DOE projects that the full implementation of the 10% bioethanol program would displace 536 million liters of imported gasoline (which is equivalent to around P15.33 million in foreign exchange savings) while a 5% biodiesel blend would reduce diesel importation by 271 million liters per year (worth around P5.99 billion).

These amounts become insignificant when the high volume of gasoline and diesel imports and increasing global prices are considered. Based on 2005 import figures, this would displace only some 34% of gasoline and 10% of diesel importation.

Nationalize the Industry

The commanding position oil TNCs enjoy in the local oil industry enables them to dictate not only the prices of petroleum products but also the exploitation and control of the country’s oil reserves and other energy resources. And such will also happen to biofuels if government allows the nascent sector to fall under the monopoly control of transnational corporations.

Biofuels development is taking place in the context of a privatized and profit-oriented energy sector. However effective and responsible state control of the energy sector is the only way to ensure that the national interest is protected and that the development of energy resources is integrated with the thrusts and priorities of economic development. Otherwise, as is happening today, the legitimate need to develop alternative energy sources with an eye towards energy independence will be exploited as just another profit-making venture by big private interests.

Real public ownership, control and regulation of the country’s energy sector are vital for this to be truly oriented towards the needs of Filipino consumers. This includes responsible state control over resources such as biofuels. This underscores yet another challenge: to ensure that the government in place is one that is fully and genuinely accountable to the people.